by Calculated Risk on 11/21/2010 08:54:00 AM

Some breaking news from the Irish Times: Lenihan to seek Cabinet approval for financial bailout

Minister for Finance Brian Lenihan said he would seek Cabinet approval later today for a financial bailout from the International Monetary Fund (IMF) and the European Union.
...
"I will be recommending to the Government that we should apply for a program and start formal applications," he said.

In addition to Ireland, the bond yields to watch are for Portugal and Spain to see if the problem spreads.

by Calculated Risk on 11/20/2010 09:31:00 PM

The previous post is the Schedule for Week of November 21st

From Suzanne Daley at the NY Times: The Hunt for Jobs Sends the Irish Abroad, Again

Ireland seems set to watch yet another generation scatter across the globe to escape desperate times. ... Experts say about 65,000 people left Ireland last year, and some estimate that the number may be more like 120,000 this year. At first, most of those leaving were immigrants returning home to Central Europe. But increasingly, the experts say, it is the Irish themselves who are heading out ...

Ireland already has a huge excess of housing units - and losing another generation will not help. The younger generation is leaving Greece too. A shrinking population - especially losing the young and well educated - doesn't help the economy recover.

by Calculated Risk on 11/20/2010 06:16:00 PM

This is a holiday week (Happy Thanksgiving!), but there will be plenty of data released early in the week. The key releases are existing home sales (on Tuesday) and New home sales (on Wednesday).

----- Monday, Nov 22nd -----
8:30 AM ET: Chicago Fed National Activity Index (October). This is a composite index of other data.

9:00 AM: CoreLogic Shadow Inventory Data for August 2010. This report provides an estimate of the number of properties not currently listed for sale that are either seriously delinquent (90 days or more), in foreclosure, or real estate owned (REO) by lenders.

Morning: Moody's/REAL Commercial Property Price Index (CPPI) for September.

1:30 PM: Minneapolis Fed President Kocherlakota speaks on "Monetary Policy, Labor Markets, and Uncertainty" before the Sioux Falls Rotary Club.

----- Tuesday, Nov 23rd -----
8:30 AM: Q3 GDP (second estimate). This is the second estimate for Q3 from the BEA, and the consensus is for real GDP growth to be revised to an increase of 2.4% annualized from the advance estimate of 2.0%.

8:30 AM: Corporate Profits, 3rd quarter 2010 (preliminary estimate)

10:00 AM: Existing Home Sales for October from the National Association of Realtors (NAR). The consensus is for sales of 4.5 million at a Seasonally Adjusted Annual Rate (SAAR) in October, about the same as the 4.53 million SAAR in September. Housing economist Tom Lawler is projecting a slight decline from last month (SAAR). In addition to sales, the level of inventory and months-of-supply will be very important (since months-of-supply impacts prices). Months-of-supply was probably still in double digits in October.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for October. The consensus is for a reading of 5 (slight expansion), the same as last month.

10:00 AM: the BLS will release the Regional and State Employment and Unemployment report for October.

2:00 PM: FOMC Minutes, Meeting of November 2-3, 2010. There might be some interesting points on QE2.

----- Wednesday, Nov 24th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This index declined sharply following the expiration of the tax credit, and the index has only recovered slightly over the last few months - suggesting home sales will be very weak through the end of the year.

8:30 AM: Personal Income and Outlays for October. The consensus is for a 0.4% increase in personal income and a 0.5% increase in personal spending, and for the Core PCE price index to increase 0.1%.

8:30 AM: The initial weekly unemployment claims report will be released a day early because of the Thanksgiving holiday. Initial claims increased slightly to 439,000 last week, and initial claims are expected to decline to 435,000 this week.

8:30 AM: Durable Goods Orders for October from the Census Bureau. The consensus is for a 0.1% increase in durable goods orders after increasing 3.3% in September.

9:55 AM: Reuter's/University of Michigan's Consumer sentiment index (final for November).

10:00 AM: New Home Sales for October from the Census Bureau. The consensus is for a slight increase in sales to 314K (SAAR) in October from 307K in September. New home sales collapsed in May and have averaged only 294K (SAAR) over the last five months. Prior to the last five months, the previous record low was 338K in Sept 1981.

10:00 AM: FHFA House Price Index for September. This is based on GSE repeat sales and is no longer as closely followed as Case-Shiller (or CoreLogic).

11:00 AM: Kansas City Fed regional Manufacturing Survey for November. The index was at 10 in October.

----- Thursday, Nov 25th -----
Thanksgiving Holiday. Markets Closed.

----- Friday, Nov 26th -----
Markets will close at 1:00 p.m. on the day after Thanksgiving.

After 4:00 PM: The FDIC will probably take Friday afternoon off ...

by Calculated Risk on 11/20/2010 02:14:00 PM

UPDATE: Good news. These are not seller-funded Down payment Assistance Programs (DAPs). From Fannie Mae:

Interested Party Contributions (IPCs) [include] ... funds that flow from an interested party through a third-party organization, including nonprofit entities, to the borrower ... Fannie Mae does not permit IPCs to be used to make the borrower’s down payment, meet financial reserve requirements, or meet minimum borrower contribution requirements.

Lynnley Browning at the NY Times mentions some of the changes: New Lending Guidelines From Fannie Mae

The rules, effective on Dec. 13, will allow buyers to use gifts and grants from nonprofit groups for their minimum 5 percent down payment, which is the threshold set by Fannie Mae, the government-owned company that sets lending standards and buys mortgages from lenders.
...
Fannie Mae is getting tougher on debt-to-income ratios, or the amount of a borrower’s gross monthly income that goes toward paying off all debts. The maximum ratio for those seeking a conventional mortgage will drop to 45 percent from 55 percent under the new guidelines.
...
But perhaps the toughest news from Fannie Mae concerns borrowers who have gone through foreclosure. They will be excluded from obtaining a Fannie-backed loan for seven years, up from four.

The lower back end debt-to-income (DTI) ratio makes sense. I'd prefer 31% for the front end DTI¹ (the HAMP goal), and 40% for the back end DTI.

Hopefully I just missed it and Fannie has made it clear that the "gift" can't be from the seller.

¹ Front end DTI includes Principal, Interest, Taxes and Insurance (PITI) plus any homeowners association fees. The back end DTI includes PITI and HOA, plus installment debt, alimony, 2nd liens, and other fixed payments.

by Calculated Risk on 11/20/2010 08:55:00 AM

First an update on the bank run from the Irish Times: AIB loses €13bn in deposits due to Irish debt fears

ALLIED IRISH Banks has lost about €13 billion in deposits since the start of the year due to concerns about the financial difficulties of the Government and the banking system, the bank said in a trading statement yesterday.

Some €12 billion of the lost deposits were withdrawn, mostly by institutional and corporate depositors, since the end of June.

This is about 17% of deposits.

And on the bailout from Bloomberg: Irish Talks on Aid Plan Intensify as Banks Lose Deposits, Cowen Campaigns

Irish officials and experts from the European Union and International Monetary Fund are working through the weekend in Dublin, racing to finish an aid agreement amid pressure to act before markets tumble.

... IMF Managing Director Dominique Strauss-Kahn said Europe is moving “too slowly” to resolve the sovereign debt crisis that began in Greece.

The Irish government is planning on releasing a four-year economic plan this coming Tuesday, and the government is expected to formally request aid after releasing the plan. A key question is if the European Commission and IMF will accept the plan or require additional action - such as raising the 12.5 per cent corporation tax.

After Ireland, the bond yields to watch are Portugal and Spain. Many analysts expect Portugal to be next in line for a bailout, and the big question is Spain.

Here are some comments from Nouriel Roubini on CNBC: Roubini Maps Out Nightmare Scenario of Domino Debt Collapse in Europe

"The next one in line is going to be Portugal.' [Roubini said] "Due to the severity of Portuguese debt problems, Portugal is going to lose market access—and that means they are going to require IMF support as well.

But the real nightmare domino is Spain. Roubini refers to the Spanish debt problems as "the elephant in the room".

"You can try to ring fence Spain. And you can essentially try to provide financing officially to Ireland, Portugal, and Greece for three years. Leave them out of the market. Maybe restructure their debt down the line."

"But if Spain falls off the cliff, there is not enough official money in this envelope of European resources to bail out Spain. Spain is too big to fail on one side—and also too big to be bailed out."

by Calculated Risk on 11/19/2010 10:58:00 PM

Note: this is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Nov 19, 2010.

Changes and comments from surferdude808:

As anticipated, the Unofficial Problem Bank List rose above 900 as the OCC released its actions through the middle of October 2010 today. Net additions were 5 institutions, which pushed the list total to 903. Assets increased this week by $1.13 billion pushing the aggregate total to $419.6 billion.

There were four removals this week including the three failures -- First Banking Center, Burlington, WI ($822 million); Gulf State Community Bank, Carrabelle, FL ($117 million); and Allegiance Bank of North America, Bala Cynwyd, PA ($116 million). First Banking Center opened in 1920, survived the Great Depression, but did not make it through the Great Recession.

The other removal was the termination of a Supervisory Agreement against The First National Bank of Trenton, Trenton, TX ($147 million) by the OCC. We would not be surprised if the termination is because the Supervisory Agreement is being replaced by a Consent Order.

The nine additions this week include Mid-Wisconsin Bank, Medford, WI ($498 million Ticker: MWFS); First National Bank South, Alma, GA ($335 million); Farmers State Bank, Victor, MT ($323 million); Madison National Bank, Merrick, NY ($305 million); United Americas Bank, National Association, Atlanta, GA ($263 million); San Antonio National Bank, Refugio, TX ($249 million); First Federal Bank, A FSB, Tuscaloosa, AL ($180 million); Santa Clara Valley Bank, National Association, Santa Paula, CA ($140 million); and Sonoran Bank, N.A., Phoenix, AZ ($36 million).

Other changes this week include the Federal Reserve issuing a Prompt Corrective Action Order against Legacy Bank, Milwaukee, WI ($216 million); and the OCC converting a Formal Agreement to a Consent Order against Fidelity Bank of Florida, National Association, Merritt Island, FL ($419 million). We anticipate the FDIC will release its actions for October next week.

The Q3 FDIC Quarterly banking profile will be released soon and will probably show around 900 problem banks at the end of September.